Investors Preference and Firms’ Reaction
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- Master of Science 
This thesis uses firms from S&P 500 as a sample to measure investors demand for high ESG ratings based on M/B ratios and ESG ratings in the period 2002-2019, and how firms react given that the demand for ESG is high. We use data from Thomson Reuters Eikon and Compustat to extract our variables to compare M/B with ESG and then we run several regressions that tells us if firms raise additional financing when high ESG is in demand. The purpose is to see if investors use ESG as a part of their financial decision making and if firms take advantage of the market momentum. We have defined high ESG as the top 25 percentile of our sample. Results indicate that investors have a preference for high ESG firms, and we find evidence that high rated ESG firms use this to issue additional equity when ESG is in demand, but no significant evidence when it comes to issuing debt.
Masteroppgave(MSc) in Master of Business - Handelshøyskolen BI, 2020